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HMRC internal manual

International Manual

Controlled Foreign Companies: Computation of Chargeable Profits and Creditable Tax: Effect of claim

The effect of a claim under ICTA88/SCH24/PARA9 is that a computation of chargeable profits is made for each accounting period starting with the accounting period specified in the claim. Thus, if the starting period is year 4 and the claim relates to year 1, losses of year 1 will be set first against profits of years 2 and 3 even though no direction has been made for those years.


The chargeable profits of A, an overseas company, (all arising from its trade) are as follows.

Accounting period Chargeable profits/losses
Year to 5 April year 1 Loss £50,000
Year to 5 April year 2 Profit £20,000
Year to 5 April year 3 Profit £80,000

An apportionment is due for the year ended 5 April year 3 in which the chargeable profits are £80,000. A claim is made under ICTA88/SCH24/PARA9 in respect of the year ended 5 April year 1. As a result, the trading loss of £50,000 is brought forward and reduced by the profit of £20,000 for the subsequent year leaving £30,000 to be relieved against the trading profits for the year ended 5 April year 3.